A Macy’s accountant hid $150 million in expenses after making a genuine mistake and trying to cover it up for years afterward, an investigation has found.
The now-fired employee accidentally underestimated the value of small package delivery fees in late 2021, an official briefed on the investigation said. Wall Street Journal.
In a desperate attempt to mask the mistake, the accountant deliberately entered incorrect accounting data and falsified accompanying documents for years until the colossal blunder came to light this autumn.
According to the official, the unnamed employee was not motivated by personal or financial gaming. It is said that they prepared false data just to cover up their mistake.
The discovery of the accounting errors prompted Macy’s executives to delay reporting their quarterly financial results in November by two weeks, causing a seismic shift in the stock as investors retreated amid the chaos.
Sales at the iconic department store chain, which also owns Bloomingdale’s, fell 2.4 percent in the quarter ended November. Shares tumbled more than 12 percent in early trading on the news. This year they had already fallen by 22 percent.
Meanwhile, shares of Macy’s fell another 10 percent on Wednesday after the retailer cut its profit targets for the year, according to the Wall Street Journal.
Executives blamed the decline on shopping habits and the cost of living and said they expected consumers to continue cutting back on non-essential spending.
A Macy’s accountant hid $150 million in expenses after making a real mistake and then trying to cover it up for years, an investigation finds
Macy’s has been hit by declining sales ahead of the traditional holiday shopping season
Chairman and CEO Tony Spring said the company is working diligently to complete the investigation
Macy’s declined to comment on whether it had referred the matter to law enforcement or regulatory authorities.
They said the employee who caused the financial nightmare hid about $151 million in cumulative delivery costs from the fourth quarter of 2021 through the third quarter of 2024.
“We have completed our investigation and are strengthening our existing controls and making additional changes to prevent this from happening again,” Macy’s CEO Tony Spring said in a news release.
The director did not reveal how the misstatements came to light, or how they managed to escape the attention of the company’s accountant, KPMG.
According to the Wall Street Journal, Macy’s paid KPMG approximately $12.8 million in audit fees between 2021 and 2023.
DailyMail.com has contacted KPMG for comment.
The Big Four accounting firms, PwC, Deloitte, EY and KPMG, have admitted to hundreds of violations of audit independence rules in the US.
A retail expert told DailyMail.com that while there may be more store closures, Macy’s is still making a profit so there is no bankruptcy risk.
The troubled department store chain announced in February that it would close 150 of them over the next three years, including 55 by the end of 2024.
There will be only 350 stores left – a far cry from the peak of around 1,100 in 2008. There has been a steady decline since then.
The company’s shares are down 22 percent so far this year
The retailer recently revealed that a lone employee had hidden more than $150 million in delivery fees
Macy’s hasn’t announced exactly which stores will be affected, but employees are speculating whether their locations could be on the chopping block.
The latest to appear is located at the Kingston Collection mall in Massachusetts, but will remain open for locals to shop there through the holidays and close in early 2025.
Speaking on this morning’s quarterly results, GlobalData retail expert Neil Saunders said: ‘Macy’s outlook is very mixed. There is still a significant decline in the figures, but the chain is not at the bottom of the rankings of department stores – and that is positive.
“The numbers are not expected to increase significantly in the coming year as the consumer economy remains under pressure and Macy’s is in the midst of a turnaround program.
‘There will certainly be store closures in the coming year, but most of these are already planned.
“Macy’s may be struggling to generate growth, but the group is still generating profits and in the black. So bankruptcy is not on the horizon.’